FHA officials have been seeking this legislation so they can act quickly to address problems involving its Home Equity Conversion Mortgage program.
The Reverse Mortgage Stabilization Act, sponsored by Rep. Denny Heck, D-Wash., was approved by voice vote on Wednesday.
The bill (H.R. 2167) explicitly grants FHA the authority to implement three reforms immediately.
These reforms would require financial assessments to ensure a HECM loan is the right product for a senior, set limits on a first draw on a new HECM loan and mandate escrow accounts for property taxes and homeowners insurance. Without this legislation, FHA would have to go through a rulemaking process that could take 18 months.
H.R. 2167 also authorizes FHA to make other immediate changes to the HECM program if they are designed to stem losses and improve financial health of the program.
This measure is needed because FHA lacks broad powers to respond quickly to problems in the reverse mortgage program and stemlosses, Heck said.
Nearly 10% of FHA-insured reverse mortgages are in technical default because HECM borrowers are behind in their tax and insurance payments.
A Senate banking panel is slated to hold a hearing on reverse mortgages on June 18. And it may lead to Senate action on a similar FHA HECM reform bill.